THE ANGELS – The Walt Disney Company reported better-than-expected fiscal first-quarter earnings on Wednesday as the media giant cut costs while revenue stagnated.
The company raised its guidance and now expects fiscal 2024 earnings per share of approximately $4.60, which would be at least 20% higher than in 2023.
Disney said it is on track to meet or exceed its goal of cutting costs by at least $7.5 billion by the end of fiscal 2024.
Here's what Disney reported compared to what Wall Street expected, according to LSEG, formerly known as Refinitiv:
- Earnings per share: Adjusted $1.22 vs. expected 99 cents
- Revenue: $23.55 billion vs. $23.64 billion expected
Disney's direct-to-consumer unit reported an operating loss of $138 million in the quarter. Including performance on ESPN+, losses across its streaming businesses narrowed to $216 million, from $1.05 billion in the prior-year period.
Disney+'s core subscribers were down 1.3 million from the previous quarter due to price increases, but the company saw an increase in average revenue per user due to those increases in subscription costs.
The company released the improvements to its streaming business a day after announcing Tuesday that it will launch a new sports streaming venture between ESPN, Fox and Warner Bros. Discovery later this year.
While no price has been determined, a logical starting point could be $45 or $50 per month with a lower introductory price to attract subscriptions, according to a person familiar with the matter, who asked not to be identified because discussions about the service have been private. .
Disney's earnings results come as its board battles again with activist investor Nelson Peltz and Blackwells Capital.
While Peltz ended a previous proxy battle against Disney a year ago after the company committed to numerous cost-cutting initiatives, he revived his fight last fall, seeking to restructure the board and win a seat for himself and the Former Disney CFO Jay Rasulo.
Peltz has cited the company's declining stock, a drop in consensus earnings estimates and disappointing studio content as he pushed for a board restructuring.
CEO Bob Iger has publicly addressed Disney's theatrical release problems, promising to rely less on sequels and more on new, quality films. Of course, production timelines typically hover around 18 months, so Disney's box office probably won't change until 2025 or 2026. At that time, Disney is scheduled to release four big blockbusters: an Avatar movie, two feature films of Star Wars and an Avengers team movie.
Also of note to investors is that this is the second quarter in which Disney uses its new financial reporting structure, which segmented the company into three divisions: entertainment, sports and experiences. Entertainment contains all of Disney's media and streaming operations, sports includes ESPN, and experiences includes the company's theme parks, hotels, cruise lines, and marketing efforts.
Tune in: CNBC's Julia Boorstin will interview Disney CEO Bob Iger at 4:05 p.m. ET on “Closing Bell: Overtime.”
